Hurt by Gov’t Policy
“Doosan Heavy Industries & Construction’s sales are likely to decrease by 350 billion won to 400 billion won a year until 2020 if the project is stopped as planned,” the credit rating agency explained, adding, “In addition, its operating profit is estimated to show a decline of 50 billion won or so and damages may follow as well.”
Nuclear power plant construction is a business item that accounts for more than 20% of the sales of Doosan Heavy Industries & Construction. However, the company is unlikely to be capable of signing any new contract for the time being with the South Korean government moving ahead with its policy for zero nuclear power generation. The company can veer to the export of related equipment and machinery from nuclear power plant construction in South Korea, but this cannot go well without support from the government.
A decline in the credit rating of Doosan Heavy Industries & Construction can negatively affect those of the other Doosan Group subsidiaries. Doosan, the holding company of the group, has Doosan Heavy Industries & Construction as its main subsidiary while Doosan Engineering & Construction and Doosan Engine need the heavy industry company’s help. Doosan Infracore, meanwhile, is expected to be affected relatively less as it is less dependent on the group.